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Earlier this year, Bloomberg reporter way Loon soon visited Hanwa Ocean, one of the biggest shipyards in South Korea.

They build everything from oil tankers to container ships that carry goods all around the world.

Waylon for people like me who've never been to a shipyard, and what does it look like.

So it's really actually a factory town.

You arrive at the top of the hill and then you slowly drive down and from there you can really see this huge crans called goliath queens.

They're really tall, almost like a building.

You see them rising up in front of your eyes.

And then beyond that you see a lot of workers on bicycles and their coveralls and their goggles and their helmets going around doing their daily work.

And then when you cast your eyes across a shipyard, you see huge blocks of metal sitting around on the ground.

They look like huge lego pieces.

These lego pieces will be assembled together over the next few weeks, months, or even years to become gigantic ships.

The largest ones can be as tall as the Empire State Building.

Just imagine the entire building tilted sideways horizontally.

You put them on the water, and then off they go.

This shipyard, Hanwa Ocean and others like it across Korea are busier than they've been in years.

Korean shipyards are fully booked till twenty twenty eight.

Workers are hiring all around.

The place is really buzzing with activity.

Every single dock space is filled.

Korean shipyards are busy these days.

As Soul and Washington land a new trade deal, it includes a huge pledge from Korea to invest one hundred and fifty billion dollars in America's shipbuilding industry to boost US maritime power.

Here's Trump talking about the alliance at a meeting with South Korean President Lee J Mung earlier this week.

You know, we really sort of need each other.

We love what they do, we love their product, we love their ships, we love at.

This newfound love affair between the two countries is driven by the US's goal to curb the dominance of the world's biggest shipbuilder, China, and boosting the South Korean shipbuilding sector is a key part of that plan.

We're going to be buying ships from South Korea, but we're also going to have them make ships here with our people.

Using our people, and we're going to go back into the shipbuilding business again.

Now you have Donald Trump trying to remake the global trade order through the use of tariffs.

And for Korea, you also have this country that used to be a huge shipbuilding power but lost its crown to China.

Having American interests in their shipbuilders.

It's also a good way for them to find new growth engines for them to expect and beyond Korea, to have that transfer of knowledge and then maybe to even start building ships in the US.

This is the Big Take Asia from Bloomberg News.

I'm Wanha.

Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region.

Today in the show, Trump has a shipbuilding dream in Korea.

Make it come true.

MASCA project, Pasca, Masca project.

We're going to do that.

I think we're going to do that very very strongly.

This week's meeting between Trump and South Korean President Lee J Mung at the White House was the first time the two met since Lee took office in June, and they discussed the details of a trade agreement reached last month.

The deal set of fifteen percent teriff freight on Korean goods imported to the US.

It also included a pledge by Korea to invest three hundred and fifty billion dollars in the US, nearly half of that dedicated to shipbuilding.

Bloomberg's Way.

Looon Soon says the initiative even has a name that's likely to get the thumbs up from Trump Masco make American Shipbuilding great Again for.

Soul in Washington.

Both do realize that shipbuilding is a big overlapping theme that they can at least see ito ion way.

Before Trump came into office, the Biden administration was already looking at concerns over shipbuilding and having seen ships as a strategic national asset.

Korea builds hundreds of ships every year.

When completed, they join a global fleet that carries eighty percent of the world's trade.

And building these massive ships is a li labor intensive process.

Hundreds of workers assemble the metal blocks together, then there's all the electronic and mechanical equipment that has to be installed before the ships are finally painted.

The whole process can take up to two years from start to launch.

They have a little ceremony to see off the ship, and I remember distinctly one of the people that we and a few he did say that each time he sends off a ship, it's like seeing off your son or your daughter off at a wedding, because it took so long to put them together, and it's a proper moment for them.

Korea's modern shipbuilding industry really took off in the nineteen seventies.

The government developed the sector by pouring subsidies into it and importing foreign tech.

The sector got a boost from a surge in global trade and demand for affordable ships.

By two thousand, Korea had become the world's biggest shipbuilder.

They had the workforce, and crucially, they were economies that would turning outwards.

They were looking to export a lot of their manufactured goods to the rest of the world as the economies of scale war of as labor costs went up, Korea stepped up to become the world's top shipbuilder in the late nineties.

It's also partly driven by its own need for national security, because you have this persistent threat from the North itself, so both military and commercial shipping.

The needs in those two aspectually drove career to become a bigger shipbuilder.

But the tide started to turn after China joined the World Trade Organization in two thousand and one.

If we were to take the year two thousand as a baseline, during that year, Korea commanded a twenty nine percent share of the global order book for ships.

Japan was not far off.

It was around twenty eight point five and China was under nine percent.

And if we fast forward by just a few years, you can tell that in the year two thousand and eight on nine China overtook Korea and Japan in just a short span of eight on nine years.

Then in two thousand and eight, the financial crisis brought global trade to a halt.

New ship orders collapsed.

Korean shipbuilders were now struggling to compete with Chinese rivals who began flooding the market with cheap vessels.

One by one, they were forced to close, workers lost their jobs, and some of the biggest shipbuilding companies reported record losses.

Today, China is by far the biggest shipbuilding country in the world.

They're building sixty percent of all the ships under construction.

Now, that's why you see the US being concerned about China's dominance because let's say in a time of crisis, what would happen to all these strategic resources that they might need to rely on to get goods and commodities flowing to US shaws And that's where a lot of the content comes from.

After the break, as Korea and US joined forces to revive American shipbuilding, could that topple China's maritime dominance.

After Trump took office earlier this year, the US took aim at China's grip on the shipbuilding industry.

It announced that ships owned, operated, or built by Chinese companies would have to pay additional fees to the US government to dock at American ports.

Ship owners were looking at paying millions of dollars more for each port visit.

When it first came out Alio this year, it cost a lot of confusion and chaos in the global shipbank industry because so many shipowners have bought Chinese ships.

Korean shipbuilders, including Hanua Ocean, were suddenly they back in demand.

They got phone calls from some of the larger container liners saying that they are willing to pay upwards off ten percent or more and premiums just to secure an earlier slot at their shipyards which are already booked to twenty twenty eight.

If I may add, no, imagine that's probably millions of dollars.

No, exactly, a container ship can cost up to tens of even hundreds of millions and a ten percent premium.

It's a really staggering amount for just one ship.

In the first half of this year, twenty five percent of the world's global ship orders went to Korea.

That's up from seventeen percent last year, and the US did eventually lower the levees on Chinese ships.

The short term chaos faded and Korean shipbuilders got fewer calls, but Waylon says the US's message to the global ship and community was received loud and clear.

It's using that leverage that it has an economic power to tell the rest of the world that wants a treyer with the that hey, you shouldn't really too much on Chinese ships because we are concerned that China could be a competitor to us.

We are also concerned that China is subsidizing a lot of these excess capacity in building ships that is at the detriment of not only your own economies, but also the US economy.

So what is forcing the rest of the shipping wall is to make a choice that either you're traded with US without Chinese ships, or you can continue buying cheaper Chinese ships but just don't trade with US.

And that's a message that're trying to put across to the rest of the world.

By targeting China's shipbuilding dominance, the US is making it clear that reliable maritime supply chains are critical to national security.

And here's an important stat Right now, the US builds less than one percent of the commercial shipping fleet.

Korea's one hundred and fifty billion dollar investment is aimed at helping the US increase that market share, and Wayland says it could help Korea too.

For these Korean shipbuilders, it actually gives them a way to secure more contracts and deals for the services that they can potentially provide for the US.

And already we see that happening, like some of them are inking contract deals with the US Navy for maintenance and repair and overhaul.

Some of them have even bought over shipyards in the US to establish a base for shipbuilding in the US.

And further down the line, we can actually think of ways that the Koreans can forge more ways of collaboration with the shipbuilders in America, and I think ultimately when you see the US shipbuilding sector growing, the Korean yards will be very good partners for them.

But for the moment, the make American Shipbuilding Great Again plan is just a handshake agreement.

Details are still scanned at this moment, but we do know that these will go into various segments of the shipbuilding sector.

It's not just about building dogs or like parts in the US, but it's also involved doing maintenance projects, building ships and also training some of the workers in the US so that overall, not only do you see ships being built in the US, you also have the technical know how an expertise being transferred from Korea to the US so that the US can start really think about having domestic ships being built.

So best case, this deal is a rising tide that lives shipbuilding in both countries.

And even if it does pay off, Korean shipbuilders will still face serious headwinds.

Wages are rising in Korea and the country is dealing with the labor shortage, one that's made worse by the lowest birth rate in the world.

If you think about shipbuilding, not only it requires a large pull of labor of workers upstream, you also need a strong supply of steel.

At the same time, they're stuck in a country that's quite small.

And China has the edge in almost all those areas.

China had a good pool of labor, they had cheap steel, and of course you have the really strong Beijing government and I think in one of the five year plans they did say explicitly during this period of time that they want to build up shipbuilding and parts are important into China's vision of a global economy.

So Wayluan China is at the moment dominating the shipbuilding market.

What edge then does Korea have to compete with China.

From our conversations with the shipbuilders in Korea, it came to realize that they're way past the stage of competing the China on the cost of building ships.

In today's shipbuilding, it's really the need for more advanced ships and also newer forms of energy.

If we talk about cleaner fuewel.

You have at the global level the International Maritime Organization trying to push for a vision to decognize the maritime sector, and with that you need to burn different kinds of fuel.

It's not just fossil fuels, but you're talking about methanol ammonia.

These are fuels that are quite new to the industry and you need to find a way to burn them efficiently but safely.

And so this is where Korea is trying to innovate on and designing engines and also the entire ship structure.

Now, way loon, since we're talking about shipbuilding in the sea, I'm going to try to use as many sea puns as I can think of.

Sure, Okay, Now, with this new US push this year the shipbuilding industry in a new direction.

Will this be smooth sailing for South Korea?

Or could it put shipbuilders in a tricky spot where they're having to just tread water.

I think it's going to be choppy waters for the current shipbuilders in the weeks and months to come, because we do see that President Donald Trump can be quite unpredictable at times in bilateral negotiations.

We already see the commitment that Korean ship builders have with regard to finding ways to collaborate with the Americans.

But the question is how willing are the Americans and seeing this in the long term, because ultimately building a ship, as we've discussed earlier.

It's beyond just two five years.

It takes a long time for the entire industry to be built.

You are taking something that takes decades to build and you're trying to crunch it down into a four yer US presidency rate.

You have the US President trying to push shipbuilding to the top of his agenda.

But at the same time, one are steps needed to turn this vision into a sustainable one beyond this term in office, and that's where a lot of the details need to be ironed out.

These are partnerships that can potentially bring a lot of benefits to both economies, and it can create a lot of jobs and also bring a lot of revenue.

But the question is how do we get there in ten years time?

And that's a big question for all the shipbuilders and the experts that we've been talking to.

This is The Big Take Asia from Bloomberg News.

I'm wanha to get more from The Big Take and unlimited access to all of Bloomberg dot Com, subscribe today at Bloomberg dot com slash podcast Offer.

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